Why it's time to thank, not spank, business failure

I spent a very enjoyable evening in central London last night at the Changemakers event organised by Seven Hills, Enternships, School for Startups, Fresh Business Thinking and the Courvoisier Future 500. In an unusual format which I think more event organisers should adopt, we were split up into five groups of 12 and sat around tables to discuss the issues facing UK entrepreneurs. In the format of dinner party starter, main and dessert courses, we debated starting up, how to grow a business and the exit process. Given the alcohol sponsor, the odd glass of cognac was also involved!

All sorts of issues were raised and too many to cover in one blog post but one point that I thought I'd focus on is how the UK business community embraces failure.

During our chat Laurence John, a venture capitalist working on the Amadeus Seed Fund, said we need to "thank and not spank failure". Once we'd all stopped laughing at the fabulous sound bite, we all agreed that it is a serious issue. Do we need to actually start celebrating failure?

Some of the very best entrepreneurs - including most of the panellists who've appeared on Dragons' Den - have had at least one business disaster in their entrepreneurial career. In fact, in the US it is said that many investors are more likely to back a business owner who has failed in the past and learnt good lessons compared to one that hasn't. Maybe if we started doing that in the UK we'd have many more start-ups and small businesses.

A lot needs to change for that to happen; our whole culture is anti-failure. Look at how Dragons' Den has developed. Many entrepreneurs have appeared on the show only to be completely humiliated on national television. And before you say, 'yes, but it's all about entertainment', I think the way the programme has changed its focus from all about business to more about car crash TV is reflective of our hatred of failure.

I'm not saying that we should encourage people to fail just so they can have the experience. I'm arguing that we need to embrace it, recognised that sometimes it's a good thing and learn from the experience so we can do things better the next time.

Another person on my table - Peter Grigg, head of policy and research at Enterprise UK - also delivered a great sound bite last night. "We should keep the entrepreneurial memory in the system," he said. By that, he meant we should make sure that serial entrepreneurs who have achieved success after success - and indeed failure after failure - are used to teach and guide the next generation of business owners. This needs to start in schools and universities with more established business owners encouraged - perhaps by tax breaks and other incentives - to share their experiences and lessons with young people.

The discussions at last night's event were filmed and a copy is going to be delivered to small business minister Mark Prisk. Let's hope that as well as taking on board the points we made about success, he also starts to examine how we deal with failure.